Where you work matters

By Lynda Arakawa
Advertiser Staff Writer

Hotel workers and airline employees may be part of the same tourism industry, but they have been experiencing a dramatically different business climate in recent years.

Sheryl Nu'uanu has received annual merit raises as a concierge at the Outrigger Reef on the Beach hotel that let her live comfortably. Deborah Booker • The Honolulu Advertiser

The impact is often reflected in the spending habits of employees.

Mike Kim, a Sheraton Princess Kaiulani Hotel guest service manager, recently moved from a condo to a home in Hawai'i Kai and bought a new SUV.

Meanwhile, Joseph Mocarski, a Hawaiian airlines pilot for 19 years, is worrying about his pension and cutting back on luxuries.

"Flying an airplane is a wonderful thing," Mocarski said. "However, the industry is not what it once was. Depending on what you really like to do you might be able to do better someplace else."

Hawai'i's hotel industry brought in a record $2.73 billion in revenue last year, thanks to high room rates. Many hoteliers say business is near or at pre-Sept. 11 levels, although some are quick to point out that they are still making up for losses suffered in the months after the Sept. 11 attack.

But the airline industry has been plagued with difficulties that have thrown many carriers into financial turmoil. The most recent example came late last year when Aloha Airlines filed for Chapter 11 bankruptcy protection, joining Hawaiian Airlines, United Airlines and ATA, all of which are trying to emerge from bankruptcy.

Nationally, the airline and hotel industries have largely been in sync with each other in previous downturns, said Joseph Toy, president of hotel consultancy Hospitality Advisors LLC.

"But what's really changed in this latest cycle of downturn and recovery has been just the tremendous operating costs that the airline industry overall has suffered," he said. The operating cost of a hotel is generally more stable than that for an airline, which probably has more fluctuation due to fuel costs, he said.

Toy said the hotel industry — with the exception of some properties — began recovering relatively quickly, largely because the U.S. market returned to Hawai'i following Sept. 11 and corporate groups canceled meetings at other destinations and moved them here.

Luxury and upscale hotels, which dropped rates during the downturn, have been able to raise them as visitors returned. But airlines were forced to keep rates low because of increasing competition from discount carriers.

Hotels are seeing more value-conscious consumers, but the industry — which ranges from budget to luxury properties — is not likely to face the same kind of problems with discounters as the airlines have, Toy said. One factor is that while many travelers view flights as just a means of transportation, they consider their hotel stay to be part of the guest experience.

"In Hawai'i the average length of stay is almost 10 days in a hotel compared to a six-hour flight," Toy said. "They'll want to spend more to really thoroughly enjoy the experience for the overall trip."

In addition to competing against low-cost carriers, many airlines have been struggling with high fuel prices, labor costs and tighter airport security that make air travel less appealing, said Fredrick Collison, professor of transportation and marketing at the University of Hawai'i Travel Industry Management School.

"The problem for the airline industry is fares are too low and costs are too high, and that's why they're in trouble," Collison said.

Collison does not discourage UH students from entering the airline industry.

"I tell them that they're going through a difficult time," he said. "Anybody who works in the airline industry is going to earn their money, no question. But I also tell them there are job openings. Maybe not as many as there were five years ago, but they do exist."

While United Airlines flight attendant Ted Pizzino, 56, of Manoa, enjoys his job, he wouldn't recommend it to others at this point.

"I would say steer clear of it for now," said Pizzino, who is secretary of the Association of Flight Attendants Council 14 in Honolulu and whose wife is also a United flight attendant. "You want to work in an industry that's making money, not losing money. We're dedicated, ... we're pretty much career people, but I'd say find work in a more stable industry. This is Chapter 5 of 10 chapters — it's going to get worse before it gets better. It's all kinds of restructuring in this business. It's a difficult field to survive in at this point.

"I enjoy going to work, so it's been a good life, a good living for us. But I fear for the future."

United flight attendants recently approved a labor agreement that includes 9.5 percent pay cuts, on top of the 10 percent cut taken in 2003, he said.

United is one of the many airlines that have received or are seeking concessions from its employees. Since 2001 the average annual pay for Hawai'i workers in the air transportation industry has fallen while hotel workers' wages have grown, according to statistics from the state Department of Labor and Industrial Relations.

Hawaiian airlines pilot Mocarski and his wife, a flight attendant for Hawaiian, are feeling the stress of the airline industry's struggles. Mocarski, 49, worries about the future of his pension, especially given the fact that federal regulations require pilots to retire by age 60.

"The unfortunate thing is that it doesn't enable you to plan well for the future because the future is being put in flux by the bankruptcy proceedings," he said. "All of our discretionary income may have to go to our retirement ... We also have to make sure that we remain solvent with regards to our mortgage payments."

Ku'ulei Mercado, who works in the accounting department at Hawaiian Airlines, considers herself lucky because she hasn't had to make many adjustments to her lifestyle.

"Someone mentioned many years ago to me that in our industry we really have no control over the competition that comes into the industry, neither do we have control over fuel, but the only thing the company can have control on is labor expenses," said Mercado, a 57-year-old Makakilo resident. "When things don't look too good, you know somewhere down the line labor will be affected.

"Regardless of my seniority, I still feel for those that have just come into the company, especially if they're coming in and hoping that this is their job for the rest of their lives and have families to support," she said. "I do feel for them. No one is really safe anymore at any job level. ... All anyone can do is just do the best job they can do where they're at and hopefully by doing so can increase your profit margin so you can continue to be profitable."

Meanwhile, Kim from the Princess Kaiulani Hotel has been enjoying nearly 30 years in a row of annual raises. He and his wife, a secretary with the city, travel every year.

Kim, who has two adult children, said money was sometimes tight in the past, "but being that (the work) is consistent and being that we have annual raises, it helps. And as time goes on we treated ourselves to things as money was available."

Sheryl Nu'uanu, a 28-year-old concierge at the Outrigger Reef on the Beach, has received annual merit increases since she began working at the hotel seven years ago. Immediately after Sept. 11, the hotel laid off some workers, and she gave up some hours so others could work as well, she said. But the hotel was fortunate enough to recover relatively quickly, thanks to incentives aimed at kama'aina and other promotions.

Nu'uanu, a Waimanalo resident, said she bought a new SUV last March. She and her husband, who runs a silk screen company, are also looking to purchase another car for him because they are expecting their first child.

"It was time to start a family and I feel that everything's in order and I'm not afraid of the financial repercussions," she said. "I'm pretty happy where I am now. I'm doing good. We're not millionaires, but we're doing OK."

Nu'uanu, however, gets worried when she hears about the airline industry's problems.

"It's like a domino effect for everything," she said. "When I hear that kind of stuff, I feel like — oh, gosh, if they're having problems, this is what brings the people here so how are we going to get them here to even fill up our hotels. Yeah, it does concern me. I get very worried."

Jason Ward, spokesman for Local 5 of the hotel and restaurant union, UNITE-HERE, said tipped employees are particularly benefiting from the hotel industry's upturn, and that on-call and part-time employees are working more as well.

"There's more work to go around, so it benefits people in that way," he said.

The union was able to secure annual raises for the approximately 8,000 hotel workers that it represents — although "not as healthy as we would have liked" — and increases in employer contributions to pensions and healthcare in its last contract. While hotel salaries have been rising faster than airline salaries in recent years, the average hotel wage is still well below the average airline wage.

The union will consider "the vitality of the industry" during negotiations for the next contract, he said.

"Certainly it looks good for us getting prepared for our negotiations in 2006," he said.

But the union can't say the same for its 375 members who work in the in-flight catering business, he said.

"What do you do when your employer is looking like it's going belly up," Ward said. "We want to do as much as we can but there's pretty limited circumstances."

But while many hotel workers have seen regular raises, it's still common for those in the industry to have more than one job to make ends meet, he said. Ward also said reduced staffing levels mean employees are doing more work.

Overall national trends point to a decline in staffing, partly because of new technology, expansions of hotel chains, consolidation of hotels, and outsourcing labor, Toy said.

Gov. Linda Lingle's tourism liaison Marsha Wienert and at least some hotel executives note that while statewide occupancies and revenues are up, the industry is not exactly in the clear.

"A good day doesn't mean that all your days will be good and doesn't make up for the historic bad days, so to say that they're fat cats right now is not necessarily so," Wienert said. "There have been horrendous losses that they actually had over the last few years. And the amount of additional financial support that had to be put into the operations, be it the management company or from the owners, was astronomical."

Wienert adds that hotel workers, as well as other Hawai'i residents, should be concerned about the problems that the airline industry faces.

Wienert said experts have told her that should a major carrier go out of business, it would take at least three months for other airlines to pick up that carrier's Hawai'i flights. That window with reduced air seats could impact Hawai'i dramatically, she said.

"We all should be concerned about the health of the airline industry," she said. "Especially from those airlines that service Hawai'i, because it is our life-

blood of the hospitality industry."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 535-2470.

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